The case's central question — whether crypto assets on Voyager's platform belong to customers or the company in bankruptcy — remains undecided, and could ultimately fall to presiding Judge Michael Wiles.
On July 5, Voyager Digital filed for Chapter 11 bankruptcy showing it held custody of $1.3 billion in customer crypto assets spread across 3.5 million active users.
As of July 1, 2022, approximately $355 million was held in FBO Accounts with Voyager's banking partner, MCB, though the amount can fluctuate.
On average, approximately $100 to $200 million was held in these accounts for the benefit of customers and not held in Voyager's bankruptcy estate according to a court document.
"We believe it is clear that the debtors [Voyager] do not hold any legal or equitable interest in the cash and the MCB FBO accounts and that such cash was held in trust for customers," a representative for Metropolitan Commercial Bank confirmed.
Addressed as a priority for Voyager from the outset, the motion had been pending a "reconciliation and fraud prevention process" due to risks that non-eligible customers were spamming MCB with "spoofed" claims requests for the cash.
As for how customers will get the rest of their funds, the best outcome for all parties will be if another firm buys the company's assets according to Jason DiBattista, head of legal analysis with Levfin Insights.
On July 21, Voyager stated in a filing it had entered confidentiality agreements with 37 potential buyers. Voyager has set a deadline for interested parties to bid on the purchase of their assets for August 26.
If the company gets more than one bid during the period, the firm is targeting a sale auction three days later followed by an approval hearing on September 7. Companies majority owned by crypto billionaire and entrepreneur Sam Bankman-Fried have since publicized an offer to buy Voyager's assets, which the embattled firm quickly rejected as a "low-ball bid" last month.
Though striking a deal with Alameda isn't off the table, the bidding process allows the firm to "market test" the value of its assets, though its deadline for the bidding may be "pretty tight" according to DiBattista.
If the bidding deadline passes with no offers accepted, Voyager will pivot to a "standalone restructuring."
Based on court documents, the company's closest proposal to a restructuring plan would distribute funds to customers in some combination of cash, their cryptocurrency holdings, recoveries from the Three Arrows bankruptcy, and tokens or equity in a new Voyager platform.
Before nailing down that plan, the embattled firm must first negotiate with its organized committee of unsecured creditors. As Yahoo Finance detailed earlier this week, letters from distressed Voyager customers to the court indicate many customers aren't satisfied with the Voyager's recommendations for a plan.
Whether negotiations can reach an outcome relies on the central question for both Voyager and Celsius’ bankruptcies — whether customer assets held on either crypto lending platform belong to customers or the bankrupt companies, according to DiBattista.
"Voyager thinks that the assets are theirs and I suspect the customers think it belongs to them," DiBattista added.